Recently I talked to the CEO of a EuroStoxx 50 company. When we discussed increasing rates of depression, burnout and absenteeism in European employees, he said: “Business is tough. People have become too pampered for it. They need to understand that we live in ‘Capitalism! ”
The question may be asked whether employees’ emotional exhaustion and ill-being are inherent ingredients of Capitalism? A look through the foundational literature of Capitalism such as Adam Smith’s The Wealth of Nations (1776) and The Theory of Moral Sentiments (1759) could help shine some light on what this CEO seemed to consider as conventional wisdom.
If you think, no need to plough through hundreds of pages of literature as conventional media or high-caliber business schools give you easy, simple insights into capitalism, think again! I myself was guilty of this misconception. I spent 20 years in investment banking. My understanding of capitalism was shaped by relying on reputable newspapers, glossy magazines, my business school education as well as my professional network of people.
We talk a lot about “truth” and “fake news” these days. Cherry-picking quotes or leaving out context can turn true sources into misleading or fake information. So when I did a literature review for my PhD, I was surprised reading Adam Smith. Yes, the ultimate goal of capitalism was maximizing wealth creation. So far I knew! When reading the full literature, however, Smith also wrote extensively about human flourishing. People feeling healthy, respected and included instead of sick, demoralized and disengaged, representing a core pre-requisite for wealth creation – not an optional extra. Should senior executives like the EuroStoxx CEO not know about that, given their prime responsibility of creating wealth for shareholders?
There has been a long list of scientific as well as practical evidence supporting Smith in the organizational context. The seminal works of Rutger Bregman (2020) and Deci & Ryan (1960-2025) as well as Hubert Joly (2021) are just pinnacles of an almost endlessly long list of publications outlining the importance of the human factor in creating performance, profitability, value and wealth.
Depression, burnout and absenteeism are not at all inherent by-products of capitalism.
In plain English: It is in senior executives’ and, in turn, shareholders’ own interest to care for their employees’ flourishing. Depression, burnout and absenteeism are not at all inherent by-products of capitalism. Or as 1970 Nobel Prize Laureate Milton Friedman put in a 1977 interview at Cornell University: “Capitalism is neither humane nor inhumane. It depends on how it is implemented”.
Hubert Joly has been recognized by Havard Business Review as one of the “One Ηundred Best-Performing CEOs in the World”. From his perspective, it will take new leadership principles for the next era of implementing capitalism. His practical advice: “Put people at the center of the business, create an environment where every employee can blossom and treat profit as an outcome, not the goal!”
This column was published in the 9th edition of Forbes Luxembourg.
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